This year’s Black Friday kickoff to the holiday shopping season has left many retailers and economists optimistic about the next few months. The National Retail Federation estimates that total Black Friday sales were up 16 percent from last year.
For those of us with no desire to brave the crowds, sales were also up significantly for online retailers. According to IBM’s research division, Coremetric, online shopping sales numbers were up 24.3 percent from 2010. Black Friday doesn’t appear to have stepped on Cyber Monday’s toes, either. Monday saw another 18 percent increase in online sales from last year.
Holiday shopping can be overwhelmingly hectic — it’s no surprise that many shoppers are taking their business online where they can take time making decisions and not have to worry about crowds or parking.
I myself have done the entirety of my holiday shopping online for the past several years. Unfortunately for brick and mortar retailers, online shopping means fewer impulse buys.
The term Black Friday was initially coined in Philadelphia prior to 1966, likely by employees dreading the big shopping day. Despite its notorious reputation, Black Friday no longer refers to the unfortunate workers schedules. In the mid-1980s, the term shifted to refer to profits.
Black Friday is the day that retailers go into the black. This is accountant-speak for making a profit, instead of being in the red, or in debt.
Many retailers make more of revenue in the last quarter of the year than the previous three quarters combined.
While Black Friday is infamous for bringing out the worst in American consumers, like pepper spraying shoppers and police tasings, it is an encouraging economic indicator, which our economy could use more of.
Based on a pre-season poll, the NRF projected that total holiday sales would be up 2.8 percent to $465.6 billion. With the success of Black Friday, it is possible that sales could be even higher.
Despite these encouraging predictions, before the recession, holiday spending rose 3 percent annually. While we may be quite a long way from returning to pre-recession spending, the stock market’s performance is encouraging.
Retail stocks have been rising steadily, pulling the S&P out of a weeklong slump as well as injecting life into the NASDAQ.
The holiday shopping season is also good for employment — at least temporarily. The NRF also reports that in addition to the 100,000 workers hired by retailers since August 2010, stores will hire between 480,000 and 500,000 seasonal workers this holiday. Many of these seasonal workers are hired full time if sales can sustain further employment.
However, despite the promising sales numbers both online and off, analysts warn against too much optimism.
While Black Friday numbers can generally be a good indicator of the holiday spending season, it is difficult to tell if the momentum will carry over. In the past, holiday spending has often been in the form of credit card debt, which Americans are less willing to acquire these days.
Whether we like it or not, the holiday season is economically driven — no matter which holiday one celebrates. When 70 percent of our nation’s economy consists of consumer spending, increases during the holiday season have a large impact. The increase in consumer spending in the last two months of the year can carry many businesses through the next ten.
Black Friday can be a dark day indeed, but our economy needs the activity and consumer demand that only the holiday season can provide.
Emily Brooks is an economics senior and may be reached at [email protected].
